In late October of 2008, I seriously looked into Solar PV again when the Federal Government as part of the first US stimulus enacted by President Bush added incentives to using Solar, Wind and Geothermal Power. I contacted Standard Solar again and they ran the numbers for a 3.68 KW system.
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Conclusion: Installing a Solar PV setup in Maryland not only made environmental sense but financial sense as well. In just two years:
1> State and Federal incentives went from $5000 to $19200.
2> Breakeven Point not including increase in home value went from 32+ years to 7.95 years and if you included home value the breakeven point was less than 2 years.
3> Return on Equity or Investment (ROI) went from 4.1% to 10+%
4> The output of the Solar panels increased from 175 watts to 230 watts or a 31% increase.
5> The overall efficiency of the panels went from 15% to 18% or a 20% increase.
6> Solar generation went from 49% to 72% of total usage.
Or 3237 kWh per year to 4530 kWh per year.
7> Tons of CO2 saved per year went from 3.19 to 4.78.
*On Going Recommendation: The Federal incentives are locked in for the next few years until 2013. However, State incentives are changing constantly. For Maryland Fiscal 2012 - with the exact same system, the grant in Maryland would be reduced from $9200 to $1000. That is a big difference.
Historical Maryland State Grants for a 3.68KW system
FY 2008 $9200 FY 2009 $4600 FY 2010 $3760
FY 2011 $1840 FY 2012 $1000
Here are our Production and Savings Numbers:
| 2009 Electricity Production in kWh ~10 months |
4,219 |
| 2010 Electricity Production To Date in kWh |
5,310 |
| 2011 Electricity Production To Date in kWh |
4,914 |
| 2012 Electricity Production To Date in kWh |
2,039 |
| Actual 2009 Electricity Savings |
$628.64 |
| Actual 2010 Electricity Savings |
$760.99 |
| Actual 2011 Electricity Savings |
$646.76 |
| Actual 2012 Electricity Savings To Date |
$234.65 |
| Additional Savings Switching Electricity |
|
| Suppliers from BGE - Clean Currents - Castlebridge |
$6.19 |
| Actual Savings Switching Natural Gas |
|
| Suppliers from BGE to WGES to Gateway to BGE |
$40.90 |
| Lifetime kWh Produced kWh |
16,482 |
| Savings to Date (lbs of CO2) |
27,354.5 |
| As of |
5/18/2012 |
| Total Electricity Savings Lifetime: |
$2,271.03 |
100% of our electricity is from green sources.
~80%+ from Solar & 20% from Wind (Offsets)
Here are the numbers from my PV setup:
Key Assumptions: Increase in home value is based upon research that shows for every $1 in energy savings it adds $20 to the home value. System installed February 26, 2009.
As of May 2012 - I have 6 SRECs waiting to be sold.
| |
Year 1 Feb 26 - Dec 31, 2009 Actual |
Year 2 2010 Actual |
Year 3 EST 2011 |
Year 4 2012 |
| Basic System Price |
$33,620.00 |
|
|
|
| State Grant (less 25% Fed tax) |
$6,900.00 |
|
|
|
| Federal Tax Credit (30%) |
$10,086.00 |
|
|
|
| Credit Total |
$16,986.00 |
|
|
|
| Net Investment |
$16,634.00 |
|
|
|
| |
50.52% |
|
|
|
| Avoided Cost of Electricity |
$628.64 |
$760.99 |
$640.00 |
$652.80 |
| SRECs (Future Est. 80% ACP) |
$720.00 |
$1,810.08 |
$0.00 |
$1,280.00 |
| MD State Tax Credit (Given for 5 Years) |
$38.18 |
$38.18 |
$38.18 |
$38.18 |
| Annual Savings |
$1,386.82 |
$2,609.25 |
$678.18 |
$1,970.98 |
| Total Savings to Date |
$1,386.82 |
$3,996.07 |
$4,674.25 |
$6,645.23 |
| |
($15,247.18) |
($12,637.93) |
($11,959.75) |
($9,988.77) |
| |
|
|
|
|
| Increase in Home Value $20 increase |
$12,572.80 |
$15,219.80 |
$12,800.00 |
$13,056.00 |
| per $1 energy savings annually |
37.40% |
45.27% |
38.07% |
38.83% |
| 2009 Report Increase in Home Value |
$18,400.00 |
$18,400.00 |
$18,400.00 |
$18,400.00 |
| $5 increase per watt installed |
54.73% |
54.73% |
54.73% |
54.73% |
| Pay Back |
7.95 |
Years |
|
|
| ROI |
8.34% |
15.69% |
4.08% |
11.85% |
|
|
|
|
|
| If you factor in increase in home value the result after one year would be: |
|
|
|
($2,674.38) |
$2,581.87 |
$840.25 |
$3,067.23 |
|
$3,152.82 |
$5,762.07 |
$6,440.25 |
$8,411.23 |
| Pay Back |
Less than 2 |
Years |
|
|
|
|
|
|
|
| System Installed on |
|
February 26, 2009 |
|
|
| Estimated Breakeven Date with House Value |
September 4, 2010 |
|
|
| Estimated Breakeven Date without House Value |
January 16, 2018 |
|
|
| Estimated Breakeven Date with New Maryland Bill Passed 5/4/2010 |
|
February 15, 2017 |
|
|
| Revised Breakeven Date (As of 12/6/2010) |
November 26, 2016 |
|
|
|
|
|
|
|
| Opportunity Cost |
|
|
|
|
| Investors define opportunity cost as the difference in return between a chosen investment and one that is necessarily passed up. In other words, it is the amount of money you could have earned if you invested in the optimal investment. |
|
| Here are sample annual rates of return for investments from January 1, 2000 to December 31, 2009 (ROI's are adjusted for Federal Taxes - 35% for interest and short-term gains - 15% for qualified dividens and long-term gains) |
|
| 5 Year CD |
|
2% - 3% ROI |
|
|
| Simulated US S&P 500 |
|
-1.47% ROI |
|
|
| IFA Real Estate Securities Index |
|
8.44% ROI |
|
|
| IFA Internatioal Value Index |
|
5.55% ROI |
|
|
| IFA 5 Year Global Fixed Income Index |
|
3.37% ROI |
|
|
| IFA Emerging Markets Index |
|
9% ROI |
|
|
| IFA Emerging Market Value Index |
|
12.65% ROI |
|
|
| Projected Return for the next 5 years from my Solar PV System |
|
12.46% ROI |
|
|
| Projected Return for the next 10 years from my Solar PV System |
|
11.61% ROI |
|
|
| Projected Return for the next 15 years from my Solar PV System |
|
10.11% ROI |
|
|
Bottom Line: There are very few other investments that would return the level of ROI that I will get with my solar PV system and the best part it is guaranteed!
On May 20th, 2010 Maryland Governor Martin O’Malley will sign into law the Renewable Portfolio Standard Bill. This important Bill will speed up the return on your solar investment.
This Bill extends for four years the $400 Alternative Compliance Payment [ACP] that electricity suppliers must pay when they fall short of generating a certain percentage from solar and other renewable sources. Higher ACP means faster payback. In my case, about 13 months faster. However, with the falling SREC prices the breakeven point may take many months or even years more.
*Website Recommendations:
- For up to date information on Grants in Maryland check out the Maryland Energy Administration:
http://energy.maryland.gov/incentives/residential/solargrants/index.asp
- For up to date information on Grants in Other States check out the Database of State Incentives for Renewables & Efficiency:
http://www.dsireusa.org/
- To calculate your expected PV production use the applet at:
http://www.pvwatts.org/
- To learn about Standard Solar who performed our installation:
http://www.standardsolar.com
- To sell SRECs at an excellent market price check out SRECTrade at:
http://www.srectrade.com
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